For manyAmericans, riches are so disreputable that taking them away is
a goal in itself. The left used to offer the misery of the poor as
a reason for redistribution, but these days an increase in
inequality is just as likely to be the
rallying cry for higher taxation. In a savage New York
Times column this past March, the economist Paul Krugman
turned rising inequality—a trend that has persisted for decades
under both Republican and Democratic presidents—into a frontal
assault on the hated Bush tax cuts. More generally, the chief
plaint of Democrats about those cuts has been not that they are
economically inefficient, or even that they are leaving wonderful
programs starved for funds, but that they primarily went to “the
rich.”

That same suspicion is
often applied to the vast wealth we enjoy as a society. Spend time
at an anti-globalization rally, and you’ll inevitably hear someone
complain that Americans are less than 5 percent of the global
population yet consume 25 percent of its output, as if we were
somehow stealing the difference from the world’s poor. Such critics
also cite the social, economic, and environmental dislocations
caused by a vibrant free market. We’re too rich, the activists are
basically saying, and our wealth has too high a cost; it’s time to
stop thinking about making money and start thinking about all the
suffering in the world.

Even those who think
wealth is good (or at least harmless) often implicitly suggest that
the pursuit of wealth and the pursuit of moral goals are separate
questions. They would do well to read Benjamin Friedman’s The
Moral Consequences of Economic Growth. The author, a professor
of political economy at Harvard, has written an economic tome that
is accessible to the average reader without failing to offer
something new to specialists as well: a compelling argument that
rising incomes make us not just richer people, but better
ones.

Friedman’s
definition of better will irritate libertarian-minded
readers, who will quarrel with his decision to count support for
generous government expenditures among the “moral consequences” of
economic growth—or, at least, with his implication that such
support is among the positive effects. But most of the
consequences he discusses would impress nearly everyone. When
earnings are growing, Friedman says, people are more tolerant of
minorities, more welcoming to immigrants, more solicitous of their
fellow citizens, more supportive of democratic institutions, and
just plain better specimens of humanity.

This result is not
surprising to anyone who has been around normally rapacious Wall
Street bankers at bonus time, but Friedman provides historical
evidence for the intuition. In painstaking detail, he outlines the
economic history of the United States, Britain, France, and Germany
since the industrial revolution. Over and over, he shows that
during periods of economic stagnation, societies become more
xenophobic, less tolerant of dissent, and more willing to embrace
anti-democratic government actions. It is no accident, he argues,
that communism and fascism were embraced by countries in economic
crisis—or that the Palmer raids and the PATRIOT Act arrived during periods of rising
financial insecurity for America’s vast
bourgeoisie.

Economists have long
known that what they call the “wealth effect” can stimulate
spending: If people feel richer because the value of their home or
stock portfolio has gone up, or because they think their income is
likely to rise in the future, they will loosen up and spend more.
Friedman suggests that people don’t merely become more willing to
treat themselves to home entertainment systems and $4 cups of
coffee as their wealth grows; they also become more generous to
others. “With rising incomes,” he says, “more people become willing
to donate time and money. And among those who do so, rising incomes
also allow people to feel able to do more.”

But direct charity is
only one of the ways we become more generous. Even more important
is the tolerance that growing wealth brings for competition from
others. There is a growing recognition that trade is a vastly more
effective way to reduce global poverty than foreign aid; even
Oxfam, a reliably left-wing nongovernmental organization, has
jumped on the free trade bandwagon with a campaign against
agricultural subsidies. Better still, trade benefits domestic
consumers. Yet progress on that front is nearly impossible unless
economic prosperity is rising fast enough to ease the fears of
those who are threatened by a more open
market.

The current global economic climate—economic stagnation in much of Europe and an
economic recovery in America that has bypassed much of the middle
class—gives us one way to test Friedman’s hypothesis. If he’s
right, global trade should be much more threatened now than it was
in the 1990s. Sure enough, the Bush administration has struggled to
pass even a minor trade pact with Central America, while the
European Union seems perfectly willing to scuttle the Doha round of
World Trade Organization negotiations rather than expose its
farmers to competition. That doesn’t prove Friedman is correct, of
course, but it’s certainly suggestive.

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